Netflix contracts with companies such as Akamai, called content delivery networks. These companies pay ISPs to co-locate their servers so that each ISP gets its own local cache of the content served by their clients. And yes, this means that the Netflix content you watch, which counts towards your monthly cap, is being served *locally*.
Customers pay ISPs to access their network. The CDN pays the ISP for the bandwidth they use to transfer their data to their servers, and the CDNs are paid by the content providers, who are, in turn, also paid by customers.
Every step of the delivery between Netflix and the customers is completely paid for, yet ISPs want to whine and cry about how Netflix is harming their network. More like anti-competitive posturing, since the ISPs doing the biggest whining happen to be owned by big media corporations.